Former AIG chief Greenberg set to appeal Gen Re, Capco rulingsPosted On: May. 2, 2011 12:00 AM CST
NEW YORK—Maurice R. Greenberg, former chairman and CEO of AIG, is scheduled on May 19 to appeal decisions that a judge made on allegations involving the New York-based insurer’s accounting, a court clerk said Friday.
A trial on some of the issues was delayed pending the appeal.
In 2005, then-New York Attorney General Eliot Spitzer filed a civil suit against Mr. Greenberg and American International Group Inc.’s former Chief Financial Officer Howard I. Smith.
Some charges remain
While many allegations were dropped after AIG’s 2006 agreement to pay $1.6 billion in damages and penalties, some charges remain, including that the two former executives were involved in arranging a bogus 2001 loss portfolio transaction with General Re Corp.
In early 2008, federal prosecutors obtained five criminal convictions against four former Gen Re executives—including former Gen Re CEO Ronald Ferguson—and former AIG Vp of Reinsurance Christian Milton in connection with the 2001 finite deal. The prosecution alleged that the sham transaction increased AIG’s reserves by about $500 million without any actual transfer of risk. The convictions are on appeal.
In addition, last October, Justice Ramos issued a summary judgment that Messrs. Greenberg and Smith were liable for the alleged improper use of an offshore vehicle, Barbados-based Capco Reinsurance, as a shell corporation to take on auto warranty losses that AIG had generated in the mid-1990s to remove them from the insurer’s books.
Paving way for trial
At the time, Justice Ramos refused summary judgment on allegations related to the Gen Re transaction, saying that while the facts “strongly suggest knowledgeable conduct on the part of Greenberg,” the evidence against him was “too remote” to charge him at the time when confronted with his denials, paving the way for the trial.
The New York State Supreme court in recent months scheduled a trial on the matter for May 2. When Mr. Greenberg’s team asked that the trial be put on hold until after their appeals of Mr. Ramos’ October rulings are decided, the court granted their wish, according to court documentation.